Thomas K. Thomas

50:50 joint venture

Singapore , June 19

Finnish telecom equipment major on Monday said that it was merging its mobile networks division with German-based technology company Siemens. The new entity called Nokia Siemens Networks will start with 60,000 employees across the world and carry revenues of € 15.8 billion for 2005.

The 50:50 joint venture will consist of Nokia's Networks Business Group and Siemens' carrier-related operations for fixed and mobile networks.

In India, while Nokia is strong on the mobile segment, Siemens has a very strong presence in the fixed line telephony business.

The merger will mean that the two companies can now jointly bid for the $5-billion tender floated by state-owned BSNL for about 45 million cellular lines. As of now, both the companies have put in different bids.

Globally, the joint venture will be the second largest company in mobile infrastructure, second in services, third in fixed infrastructure, and the third largest in the overall telecommunications infrastructure market.

The Nokia-Siemens merger comes close to the merger of Alcatel and Lucent, announced recently.

Industry analysts predict that more such mergers are likely in future to counter competition from Asian manufacturers such as Huawei and ZTE.

"We believe the partnership with Siemens is the most effective way to build the scale and broad product portfolio necessary to compete globally and create value for shareholders," said Mr Olli-Pekka Kallasvuo, CEO of Nokia, in a press release. Mr Kallasuo will be the Chairman of the new entity.

Nokia Siemens Networks will have its operational headquarters in the Helsinki, Finland. Mr Seimon Beresford-Wylie, currently Executive Vice-President and General Manager of Networks at Nokia, will assume the position of Chief Executive Officer immediately upon the closing of the merger expected to take place before January 1, 2007.

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